Trump Demands Zero Interest Rates From “Boneheads” at the Federal Reserve

President Donald Trump tweeted this morning that "The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet………The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of ‘Boneheads.’" (The president has long made it clear that obedience to his whims is the most important quality he seeks in members of the Federal Reserve Board.) Those who approach monetary policy from a free market perspective mistrust—and see as inherently artificial and manipulative—using Federal Reserve interest rate policy to satisfy short-term political goals. George Selgin, director of the Center for Monetary and Financial Alternatives at the Cato Institute, said in an email this morning that Trump’s "repeated badgering of Fed officials, calling for them to ease monetary policy despite near-target inflation, robust spending growth, and low unemployment, has one thing to be said in its favor: assuming that these statistics don’t change dramatically, it offers the Fed a unique opportunity to prove that its much-ballyhooed independence is, after all, not just a fairy tale." Selgin further writes that, contra Trump’s implication, "it simply isn’t true that there is […]

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